The Allahabad High Court in the case of M/s Tenet Networks Private Ltd v. GST Council and Others held that rejection of an appeal as time-barred without considering the assessee’s contention regarding delayed uploading of Form GST DRC-07 reflects non-application of mind and is unsustainable. The petitioner argued that although the penalty order was passed earlier, the mandatory summary in Form DRC-07—required to file an appeal—was uploaded much later, and hence limitation should be computed from that date. The appellate authority dismissed the appeal solely on limitation without addressing this specific ground. The Court emphasized that once a ground is raised in the appeal memo, the authority must evaluate it and provide reasoning. Since this was not done, the appellate order was set aside and the matter remitted for fresh consideration of delay condonation in accordance with law. The ruling clarifies that while statutory limitation remains intact, procedural lapses like delayed DRC-07 issuance must be duly examined before rejecting appeals.
Facts:
M/s Tenet Networks Private Ltd (“the Petitioner”) is engaged in the business of wireless networking and is registered under the provisions of the UPGST/CGST Act, 2017. The Petitioner purchased wireless networking equipment valuing ₹26,25,000 from M/s Brij Systems Ltd., Delhi, and an e-way bill containing GST @18% was generated by the supplier on July 20, 2022.
The consignment was intercepted by Assistant Commissioner, Sales Tax, Mobile Squad-4, Noida (“the Respondent”) on July 30, 2022 on the ground that Part-B of the e-way bill had not been filled by the transporter. Physical verification of the goods was carried out and no discrepancy was found. However, a notice in Form MoV-07 was issued and thereafter a penalty order in Form MoV-09 under Section 129(1)(a) of the CGST/UPGST Act imposing penalty of ₹9,50,000.
The Petitioner contended that although the penalty order was passed on August 01, 2022, the summary of demand in Form GST DRC-07 was uploaded only on November 26, 2022 after the Petitioner requested the department to provide the same. Since Form DRC-07 is required to challenge the demand order in appeal, the limitation period should run from November 26, 2022 and therefore the appeal filed in January 2023 was within limitation.
The Respondent contended that the Petitioner was fully aware of the order dated August 01, 2022, and had also deposited the penalty amount pursuant to which the goods were released, and therefore the delay in filing the appeal cannot be justified on the ground that Form GST DRC-07 was issued later.
The Petitioner preferred a statutory appeal under Section 107 of the CGST/UPGST Act before the Additional Commissioner (Appeals), seeking condonation of delay. The appellate authority, by order dated July 21, 2023, rejected the appeal as time-barred, holding that it had been filed beyond the statutory period of three months plus one month. Aggrieved, the Petitioner approached the Allahabad High Court by filing a writ petition under Article 226 of the Constitution of India challenging the appellate order as well as the original order.
Issue:
Whether the appellate authority was justified in rejecting the appeal as time-barred under Section 107 of the CGST/UPGST Act without considering the Petitioner’s contention that Form GST DRC-07 was uploaded later and therefore limitation should run from that date
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 361 of 2024 held as under:
- Observed that, it is not in dispute that the order in original was passed on August 01, 2022 and that Section 107 provides a limitation period of three months with an additional grace period of one month for filing an appeal.
- Noted that, the Petitioner had specifically pleaded in the memorandum of appeal that the summary of the demand order in Form GST DRC-07 had not been uploaded until November 26, 2022, and therefore delay had occurred on account of non-availability of the mandatory document required to challenge the order.
- Observed that, the said ground raised in the appeal memo was not considered by the appellate authority while rejecting the appeal on limitation.
- Held that, once a ground is taken in the memorandum of appeal, the appellate authority is required to consider the same and record its reasoning for accepting or rejecting it.
- Held that, since the grounds taken by the Petitioner for condonation of delay were not adverted to in the correct perspective, the appellate order cannot be sustained.
- The order dated July 21, 2023 passed by the Additional Commissioner (Appeals) was set aside. The matter was remitted to the appellate authority to decide the delay condonation application strictly in accordance with law within two months from the date of production of the certified copy of the order.
Our Comments:
This High Court in the precedent Mohd. Ishak v. State of U.P. [2025 UPTC (Vol.119) 134], considered the effect, import and impact of Form GST DRC-07 under Rule 142(5) of the CGST Rules, 2017. The Court observed that declaration of Form GST DRC-07 is a mandatory requirement of law, and where the demand order is not accompanied by the said form, the assessee may not have proper knowledge of the demand order and therefore delay in filing appeal cannot be attributed to the assessee.
Further in Simplex Infrastructure Ltd. v. Joint Commissioner of Central Tax and Others [W.A. No. 942/2021, order dated December 03, 2021], the Karnataka High Court wherein it was held that the appellate authority does not possess power to condone delay beyond the statutory period prescribed under Section 107 of the CGST Act, and that only the High Court may exercise jurisdiction under Article 226 of the Constitution of India to grant relief in such cases.
The present judgment does not dilute the limitation prescribed under Section 107. Rather, it holds that the appellate authority must examine the grounds raised by the appellant, particularly when the delay is attributed to procedural requirements under the GST Rules such as issuance of Form GST DRC-07.
Relevant Provisions:
Section 107 of the CGST Act, 2017
“107. Appeals to Appellate Authority.-
(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.
(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.
(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.
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Rule 142(5)of the CGST Rules, 2017
142. Notice and order for demand of amounts payable under the Act. –
“(5) A summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 74A or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and penalty, as the case may be, payable by the person concerned”
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